While many industries suffered under the lockdown era of COVID-19
One industry in particular seems to have not only bucked that trend, but is now blossoming into a global superpower. The $200 billion video game industry.
The relatively young industry, once a focus of only a small group of hardcore fans and gamers, is growing by a near 10% compound annual growth rate (CAGR) and is expected to be worth roughly $315 billion by 2027. That’s $115 billion more than today.
With such strong growth comes strong deals. While smaller studios and developers have been pushing the envelope in gaming and technology, doing all the legwork, larger players have opted to grow by acquisition.
Sony, with an 8% share of the market, agreed to buy Bungie (the developer of Destiny) for $3.5 billion. Microsoft has a deal to acquire Activision Blizzard for $69 billion and Take-Two Interactive announced its plans to purchase Zynga for nearly $13 billion.
These three deals, totaling $85 billion, have occurred in just the first six weeks of the year.
According to the Global Market Model, the global video game software market size grew from $168.8 billion in 2020 to this years’ $200 billion. It’s expected to surge upwards reaching $300 billion in 2026, and by 2030, the industry could be worth nearly a half-trillion dollars.
So, with such rapid growth, it makes sense why the larger gaming companies are gobbling up smaller competitors at breakneck rates.
After all, why do all the hard work when you can just buy out the competition?
At its current deal trajectory, well over $200 billion in deals could occur this year in the video game industry. However, it’s more likely to be near $125-150 billion.
Either way, deal value across the space will most likely break records again this year.
It’s why investing in select companies, those who could become buyout targets, is such a wise move.
When Microsoft’s deal for Activision Blizzard, for example, was announced, ATVI stock was trading around $65 per share. The deal values ATVI at $95, or a 46% premium over the price pre-announcement.
Read more about the 2022 deal flow, HERE
Or discover a small game-tech company with patents in e-Commerce, HERE